Sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they rise further.
Purchases climbed 1.7% to a 5.48 million annual rate, the highest since February 2007, figures from the National Association of Realtors showed today in Washington. The median forecast of 79 economists in a Bloomberg survey called for a drop to 5.25 million. The median price jumped by the most since October 2005 reflecting tight inventory, the group said.
The data reflect some transactions begun a month or two earlier, when buyers were trying to get loans when mortgage rates were near record lows. Lawrence Yun, the group’s chief economist, said the surge in August was probably the “last hurrah” for the next 12 to 18 months as the recent gains in borrowing costs and prices hurt affordability.
“Housing will continue to improve, though the remarkable pace of improvement we saw in recent months isn’t going to persist,” Tom Simons, an economist at Jefferies LLC in New York, said before the report. “The impact that higher mortgage rates are likely to have is like taking the foot off the accelerator.”
Economists estimates in the Bloomberg survey ranged from 4.95 million to 5.41 million. The prior month’s pace was unrevised from the 5.39 million previously reported.
The median price of an existing home increased 14.7% from a year ago to $212,100, today’s report showed. That was the biggest gain since October 2005.
Compared with a year earlier, purchases increased 10.5% before adjusting for seasonal variations.
Activity at lockboxes, which hold the keys real-estate agents use to show houses to prospective buyers, showed “some significant change in direction” in recent weeks, indicating sales will probably slow in coming months, Yun said at a news conference today as the figures were released.
“Rising mortgage rates hurried some people into making the decision” to close on a deal, he said, which means demand will cool in coming months.
The number of previously owned homes on the market was 2.25 million at the end of August, the fewest for that month since 2002. At the current sales pace, it would take 4.9 months to sell those houses compared with 5 months at the end of the prior month.